Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on, among other things, BKIs earnings per share and ROE, its interest coverage, and debt ratios, the familys ownership interest, and the companys cost of capital.

BLAINE KITCHENWARE Case Exhibit 1 Operating Results: Revenue Less: Cost of Goods Sold Gross Profit Less: Selling, General & Administrative Operating Income Plus: Depreciation & Amortization EBITDA 2004 291,940 204,265 87,676 25,293 62,383 6,987 69,370 2005 307,964 220,234 87,731 27,049 60,682 8,213 68,895 2006 342,251 249,794 92,458 28,512 63,946 9,914 73,860 EBIT Plus: Other Income (expense) Earnings Before Tax Less: Taxes Net Income Dividends 62,383 15,719 78,101 24,989 53,112 18,589 60,682 16,057 76,738 24,303 52,435 22,871 63,946 13,506 77,451 23,821 53,630 28,345 Margins: Revenue Growth Gross Margin EBIT Margin EBITDA Margin Effective Tax Rate (1) Net Income Margin Dividend payout ratio 3.2% 30.0% 21.4% 23.8% 32.0% 18.2% 35.0% 5.5% 28.5% 19.7% 22.4% 31.7% 17.0% 43.6% 11.1% 27.0% 18.7% 21.6% 30.8% 15.7% 52.9% (1) Blaine's future tax rate is assumed to revert to the statutory rate of 40%. Case Exhibit 2 Assets: Cash & Cash Equivalents Marketable Securities Accounts Receivable Inventory Other Current Assets Total Current Assets 2004 67,391 218,403 40,709 47,262 2,586 376,351 2005 70,853 196,763 43,235 49,728 3,871 364,449 2006 66,557 164,309 48,780 54,874 5,157 339,678 Property, Plant & Equipment Goodwill Other Assets Total Assets 99,402 8,134 13,331 497,217 138,546 20,439 27,394 550,829 174,321 38,281 39,973 592,253 Liabilities & Shareholders' Equity: Accounts Payable Accrued Liabilities Taxes Payable Total Current Liabilities Other liabilities Deferred Taxes Total Liabilities Shareholders' Equity Total Liabilities & Shareholders' Equity 26,106 22,605 14,225 62,935 1,794 15,111 79,840 417,377 497,217 28,589 24,921 17,196 70,705 3,151 18,434 92,290 458,538 550,829 31,936 27,761 16,884 76,581 4,814 22,495 103,890 488,363 592,253 Note: Many items in BKI's historical balance sheets, e.g. Property, Plant & Equipment have been affected by the firm's acquisitions. Exhibit 3 Selected Operating and Financial Data for Public Kitchenware Producers Revenue EBIT EBITDA Net income Home & Hearth Design $589,747 106,763 119,190 $53,698 Auto Tech Appliances $18,080,000 2,505,200 3,055,200 $1,416,012 XQL Corp. $4,313,300 721,297 796,497 $412,307 Bunkerhill, Inc. $3,671,100 566,099 610,399 $335,073 Easy Living Systems $188,955 19,613 23,356 $13,173 Blaine Kitchenware $342,251 63,946 73,860 $53,630 Cash & securities Net working capital* Net fixed assets Total assets $21,495 54,316 900,803 $976,613 $536,099 1,247,520 7,463,564 $9,247,183 $21,425 353,691 3,322,837 $3,697,952 $153,680 334,804 815,304 $1,303,788 $242,102 21,220 68,788 $332,110 $230,866 32,231 174,321 $592,253 ($230,866) Net debt (1) Total debt Book equity $350,798 372,293 $475,377 $4,437,314 4,973,413 $3,283,000 $950,802 972,227 $2,109,400 $238,056 391,736 $804,400 ($64,800) 177,302 $94,919 $488,363 Market capitalization Enterprise value (MVIC) 776,427 $1,127,226 13,978,375 $18,415,689 5,290,145 $6,240,947 3,962,780 $4,200,836 418,749 $353,949 959,596 $728,730 Equity beta 1.03 1.24 0.96 0.92 0.67 0.56 LTM Trading Multiples MVIC/Revenue MVIC/EBIT MVIC/EBITDA Market/Book equity 1.91x 10.56x 9.46x 1.63x 1.02x 7.35x 6.03x 4.26x 1.45x 8.65x 7.84x 2.51x 1.14x 7.42x 6.88x 4.93x 1.87x 18.05x 15.15x 4.41x 2.13x 11.40x 9.87x 1.96x Net Debt/Equity Net Debt/Enterprise Value 45.18% 31.12% 31.74% 24.10% 17.97% 15.23% 6.01% 5.67% -15.47% -18.31% -24.06% -31.68% * Net working capital excludes cash and securities (1) Net debt is total long term and short term debt less excess cash. Exhibit 4 Contemporaneous Capital Market Data: April 21, 2007 Yields on US Treasury Securities Maturity 30 days 4.55% 60 days 4.73% 90 days 4.91% 4.90% 4.91% 5.02% 5.26% 5.10% 1 year 5 years 10 years 20 years 30 years Seasoned corporate bond yields Moody's Aaa 5.88% 6.04% A 6.35% Baa 6.72% Ba 7.88% B 8.94% Default spread 0.86% 1.02% 1.33% 1.70% 2.86% 3.92% BLAINE KITCHENWARE Case Exhibit 1 Operating Results: Revenue Less: Cost of Goods Sold Gross Profit Less: Selling, General & Administrative Operating Income Plus: Depreciation & Amortization EBITDA 2004 291,940 204,265 87,676 25,293 62,383 6,987 69,370 2005 307,964 220,234 87,731 27,049 60,682 8,213 68,895 2006 342,251 249,794 92,458 28,512 63,946 9,914 73,860 EBIT Plus: Other Income (expense) Earnings Before Tax Less: Taxes Net Income Dividends 62,383 15,719 78,101 24,989 53,112 18,589 60,682 16,057 76,738 24,303 52,435 22,871 63,946 13,506 77,451 23,821 53,630 28,345 Margins: Revenue Growth Gross Margin EBIT Margin EBITDA Margin Effective Tax Rate (1) Net Income Margin Dividend payout ratio 3.2% 30.0% 21.4% 23.8% 32.0% 18.2% 35.0% 5.5% 28.5% 19.7% 22.4% 31.7% 17.0% 43.6% 11.1% 27.0% 18.7% 21.6% 30.8% 15.7% 52.9% (1) Blaine's future tax rate is assumed to revert to the statutory rate of 40%. Case Exhibit 2 Assets: Cash & Cash Equivalents Marketable Securities Accounts Receivable Inventory Other Current Assets Total Current Assets 2004 67,391 218,403 40,709 47,262 2,586 376,351 2005 70,853 196,763 43,235 49,728 3,871 364,449 2006 66,557 164,309 48,780 54,874 5,157 339,678 Property, Plant & Equipment Goodwill Other Assets Total Assets 99,402 8,134 13,331 497,217 138,546 20,439 27,394 550,829 174,321 38,281 39,973 592,253 Liabilities & Shareholders' Equity: Accounts Payable Accrued Liabilities Taxes Payable Total Current Liabilities Other liabilities Deferred Taxes Total Liabilities Shareholders' Equity Total Liabilities & Shareholders' Equity 26,106 22,605 14,225 62,935 1,794 15,111 79,840 417,377 497,217 28,589 24,921 17,196 70,705 3,151 18,434 92,290 458,538 550,829 31,936 27,761 16,884 76,581 4,814 22,495 103,890 488,363 592,253 Note: Many items in BKI's historical balance sheets, e.g. Property, Plant & Equipment have been affected by the firm's acquisitions. Exhibit 3 Selected Operating and Financial Data for Public Kitchenware Producers Revenue EBIT EBITDA Net income Home & Hearth Design $589,747 106,763 119,190 $53,698 Auto Tech Appliances $18,080,000 2,505,200 3,055,200 $1,416,012 XQL Corp. $4,313,300 721,297 796,497 $412,307 Bunkerhill, Inc. $3,671,100 566,099 610,399 $335,073 Easy Living Systems $188,955 19,613 23,356 $13,173 Blaine Kitchenware $342,251 63,946 73,860 $53,630 Cash & securities Net working capital* Net fixed assets Total assets $21,495 54,316 900,803 $976,613 $536,099 1,247,520 7,463,564 $9,247,183 $21,425 353,691 3,322,837 $3,697,952 $153,680 334,804 815,304 $1,303,788 $242,102 21,220 68,788 $332,110 $230,866 32,231 174,321 $592,253 ($230,866) Net debt (1) Total debt Book equity $350,798 372,293 $475,377 $4,437,314 4,973,413 $3,283,000 $950,802 972,227 $2,109,400 $238,056 391,736 $804,400 ($64,800) 177,302 $94,919 $488,363 Market capitalization Enterprise value (MVIC) 776,427 $1,127,226 13,978,375 $18,415,689 5,290,145 $6,240,947 3,962,780 $4,200,836 418,749 $353,949 959,596 $728,730 Equity beta 1.03 1.24 0.96 0.92 0.67 0.56 LTM Trading Multiples MVIC/Revenue MVIC/EBIT MVIC/EBITDA Market/Book equity 1.91x 10.56x 9.46x 1.63x 1.02x 7.35x 6.03x 4.26x 1.45x 8.65x 7.84x 2.51x 1.14x 7.42x 6.88x 4.93x 1.87x 18.05x 15.15x 4.41x 2.13x 11.40x 9.87x 1.96x Net Debt/Equity Net Debt/Enterprise Value 45.18% 31.12% 31.74% 24.10% 17.97% 15.23% 6.01% 5.67% -15.47% -18.31% -24.06% -31.68% * Net working capital excludes cash and securities (1) Net debt is total long term and short term debt less excess cash. Exhibit 4 Contemporaneous Capital Market Data: April 21, 2007 Yields on US Treasury Securities Maturity 30 days 4.55% 60 days 4.73% 90 days 4.91% 4.90% 4.91% 5.02% 5.26% 5.10% 1 year 5 years 10 years 20 years 30 years Seasoned corporate bond yields Moody's Aaa 5.88% 6.04% A 6.35% Baa 6.72% Ba 7.88% B 8.94% Default spread 0.86% 1.02% 1.33% 1.70% 2.86% 3.92%